(An) optimal EPQ policy for the production system with rework

Abstract

Rework, which is described as the transformation of defective products generated during production period into serviceable ones, is an important reverse logistics issue in many industries. This thesis studies a production inventory system with rework where the stationary demand can be satisfied by production setup with new raw materials or rework setup with defective items generated during production process. Through the development of the mathematical model, an optimal policy is found on the economic production quantity (EPQ), the number of production and rework setups in a cycle time and their sequences. Based on the properties of the models, an optimal solution procedure is proposed.